[PearlJam]

We are all capitalists as long as it suits us. When we start losing and others start gaining a lot, we become socialists - an old Chinese proverb

Taleb says that "Corporate Socialism" is when the Government is Bailing Out Investors & Managers, Not You.

[NPV]

This was in today's newspaper.
Source:Indian express, 12 Apr 2020, Bangalore edition
City techies stare at layoffs, salary cut
- Link

[V.Narayan]

Originally Posted by NPV

This was in today's newspaper.
Source:Indian express, 12 Apr 2020, Bangalore edition
City techies stare at layoffs, salary cut
- Link

One fear many companies have is that they expect this to be a long drawn campaign against Covid-19 even if the lock down is lifted shortly. One consequence will be a permanent reduction of revenues. Another consequence of that will be some State Govt's bringing in knee-jerk laws banning retrenchment without fully understanding that with reduced revenues all factor inputs to production will have to be reduced also. Therefore the thinking at several medium enterprises is that it will not pay to be the last to retrench and then discover it has been banned. If a ban were to come it will be the worst thing a State Govt could do to encourage future employment creation. But I wouldn't put it past a few of them to actually bring such a law.

[NPV]

Originally Posted by V.Narayan

If a ban were to come it will be the worst thing a State Govt could do to encourage future employment creation. But I wouldn't put it past a few of them to actually bring such a law.

True, also there may be some exceptions where this could be applicable, for example in SEZ campuses where the government actually gives additional benefits to employers for creating jobs, I guess there will be clauses to ensure employers guarantee those jobs for a certain period. I've heard about this but don't know more.

Tough times ahead and that's quite clear!

[DigitalOne]

Originally Posted by V.Narayan

Can the experts opine on the impact the CV-19 caused economic slowdown will have on those countries, other than USA, with very large volumes of debt. ExampleS;

UK - Debt $ 8.5 trillion, 3.1X GDP
Spain - Debt $ 2.3 trillion, 1.7X GDP
Italy - Debt $2.5 trillion, 1.2X GDP
France - Debt $5.7 trillion, 2.1X GDP
Portugal - Debt $0.45 trillion, 2.2X GDP

One layman question about countries' debt levels that I always had was: Why is a country's debt levels such a problem? Who are the big lenders in these cases? Is it multilateral organisations like World bank/IMF? Or is it China?
In either case, can't the borrowing countries just keep repaying smaller bond holders and keep restructuring the bigger loans for perpetuity (or just keep paying the interest component)? Finally the lender will have to restructure as it happened in Greece few years back. China/IMF etc is not going to send "recovery agents" to Italy or Spain, forget about United States.

If one country is in a debt problem, it's a problem for that country. If the whole world is in the problem, then it is just pushing the problem to eternity. No?

[dark.knight]

The list of business entities that are going to fall has just doubled if not tripled at this rate i.e extended lockdown.

Construction industry will be worst hit, and they have so many workers and infrastructure upkeep costs that even 1 month idle will smoke them. Automobile industry will be next, Nissan will fold up very likely while VW and Skoda will be badly affected because their sales were as it is, just keeping dealerships afloat, if you combine 2-3 months of bad sales, salaries and expenses as usual, it'll leave a LOT of dealers reeling.

Movie industry may soon move into the likes of straming box office, if this so called distancing isn't lifted soon, that'll be the true collapse of theatre owners. Consumer durables demand will be down for a few months leaving the likes of large consumer durable showrooms decimated. Hotels, specially the upscale ones are doomed. Their loss is Amazon, Swiggy and Zomatos gain as home delivery will sadly become the de facto choice soon.

Those who're not involved in the intricacies of business, the fundamentals are comparable to a rubber band where the rubber band stretched indicates expenses and working capital, and with sales and profits the rubber band relaxes, now for 1 month or so, the rubber band has been stretched beyond comfort, only a matter of time till it snaps into its default size (i.e business going back to drawing board) or snaps (going bust). Capitalism has never looked so bleak and we are in recession now for sure.

IT will witness layoffs in tremendous scale and America might even begin to withdraw from India wherever unnecessary. When all this reaches lower property values and lower rate of return on investments then the basis of savings go for a toss.

[CarJunki]

I do not wish to talk on behalf of others, but my own consumption pattern will change.
If say there is one fine day where all governments declare we are free (or immune) to virus, will I resume my leisure and commercial activity at pre virus level. No. A BIG No.

Few things I will not do for many months:
- Visit a mall
- Visit a theater (not that i am a frequent consumer there anyway)
- Eat out or order food from outside (simply no control over hygiene followed)
- Visit a large gathering (even temples)
- Go on holiday or even travel within country
- I was thinking of replacing one of the cars, that is not happening now in 2020 or 2021


What i will do:
- Go for long drives with family to secluded places for picnic
- Any expense that is not essential will be curtailed

The economic uncertainty is too high to be understood right now. It will be very very difficult for people to find a new job if they lose one now.

One thing is: India emerged as back office of world, and back office operations do not spread virus globally, this may continue after a longish slump. But has all the potential to recover. Even outsourced R&D operations may recover.

[SilentEngine]

Originally Posted by DigitalOne

One layman question about countries' debt levels that I always had was: Why is a country's debt levels such a problem? Who are the big lenders in these cases?
....
If one country is in a debt problem, it's a problem for that country. If the whole world is in the problem, then it is just pushing the problem to eternity. No?

Good question, would love to know the answer to this myself.
To me it looks a like a giant Ponzi scheme involving every country, where everyones lends to each other using future prospects as collateral. What would it take for such a bubble to burst?

[lapis_lazuli]

In the meanwhile, People's Bank of China buys 1% stake in HDFC Bank.

https://www.moneycontrol.com/news/bu...c-5135931.html

[SilentEngine]

Originally Posted by lapis_lazuli

In the meanwhile, People's Bank of China buys 1% stake in HDFC Bank.

https://www.moneycontrol.com/news/bu...c-5135931.html

Small correction, it's HDFC Ltd, not HDFC Bank.

HDFC Ltd owns 19.43% stake in HDFC Bank.

As per the latest shareholding pattern, foreign portfolio investors hold 70.88% stake in the HDFC Ltd including 3.2% stake of the Government of Singapore.

https://www.livemint.com/market/stoc...677655438.html

[balenoed_]

A friend in US sent me this snapshot today when I asked him if the situation is any close to improving. He says it is getting worse.



Cannot imagine how this is going to end in US and what the repercussions would be due to this.

[V.Narayan]

Originally Posted by V.Narayan

Can the experts opine on the impact the CV-19 caused economic slowdown will have on those countries, other than USA, with very large volumes of debt. ExampleS;

UK - Debt $ 8.5 trillion, 3.1X GDP
Spain - Debt $ 2.3 trillion, 1.7X GDP
Italy - Debt $2.5 trillion, 1.2X GDP
France - Debt $5.7 trillion, 2.1X GDP
Portugal - Debt $0.45 trillion, 2.2X GDP

These and many others are at debt levels that assume a steadily growing world economy and a healthy own economy. Almost all Western countries are in this bucket including small economies such as Slovenia, Latvia etc. Now both assumptions are overturned at least for 1 year and maybe for 2 years. Do you think any of these countries might start defaulting.

Originally Posted by DigitalOne

One layman question about countries' debt levels that I always had was: Why is a country's debt levels such a problem? Who are the big lenders in these cases? Is it multilateral organisations like World bank/IMF? Or is it China?
In either case, can't the borrowing countries just keep repaying smaller bond holders and keep restructuring the bigger loans for perpetuity (or just keep paying the interest component)? Finally the lender will have to restructure as it happened in Greece few years back. China/IMF etc is not going to send "recovery agents" to Italy or Spain, forget about United States.

If one country is in a debt problem, it's a problem for that country. If the whole world is in the problem, then it is just pushing the problem to eternity. No?

Originally Posted by SilentEngine

Good question, would love to know the answer to this myself.

I will wait for those more knowledgeable to opine. What little I know is as follows:

These are forex debt figures owed by the Govt's and companies and private individuals of these countries to foreign lenders. These figures do not include local currency debt. The lenders (ie creditors) in such cases are banks, financial institutions, hedge funds, debt mutual funds, bond traders, companies, individual HNIs, other Govt's, statutory organizations etc. Countries like India (0.19X), South Korea (0.27X) & China (0.15X) keep a tight lid on this exposure. In our case regulated by the RBI. Figures in brackets indicates how many times GDP is their FX debt. As you can see it is a fraction. European countries have tended to, in the last 35 years (since Reganomics) to pick up a lot of FX debt. Strong currencies, long term steady growth, liv to 4ing in a prosperous neighbourhood all lent themselves to making this sustainable. Though UK, Spain & Italy are at the brink of even what is sustainable in normal positive times.

When a country starts to default on its debt it basically makes itself a pariah for a very long time for future borrowings or even investments to some extent. Even though it is a small economy Greece's defaults shook the European monetary system to the core. And even today literally a decade later there is no end in sight and no recovery for Greece. Large borrowers defaulting impact, adversely, the financial situation even in the country of the lender which then sets in action its own chain of adverse economic repurcussions.

Yes, if every one of the largest 50 economies default then no one is a defaulter. Being a defaulter will be the new normal. But that's not going to happen. China, Japan, India, South Korea and several others have very well managed debt levels. I don't see any way they will default. Same with Germany. USA, as holder & printer of the world's reserve currency cannot default. But corporate borrowers in Spain, Italy, Portugal, UK, Belgium can be in trouble if their economies shrink by say 3% to 4%. But as I said this is not my area of expertise.

[mohansrides]

Originally Posted by Chetan_Rao

A lot of people only realize how deficient and hollow the 'life over livelihood' slogan sounds once their livelihood is lost, and we're going to see a huge influx in this category soon enough.

Prepare to hear a lot of 'Oh but I didn't imagine my livelihood would be lost when I said that!'.

These are difficult times, and it's about time a lot of us learnt the lesson how deeply livelihoods affect lives, esp. for those not fortunate enough to have buffers protecting them, so we're a bit more empathetic when the debate rears up repeatedly in the next months and years.

This!!

I have nothing but respect for the administration. But, if we look at the justifications given for the lockdown, the stated goal of "we have to save each and every life" does not even appear plausible.

Aside from the structural faults in the economy being pried open at this time, what the shutdown is really laying bare is that fear is the biggest culprit here. Irrational and misplaced fear.

Yes, many people are dying from Covid; and more will undoubtedly die. I am not being in any way dismissive or disrespectful of those lives lost, or of people fighting the illness currently. As I have said in other threads, we are all at risk in my own house.

But, let us be clear that a Covid infection is NOT a death sentence. Far from it in fact. Going by current trends, almost 95% of those infected appear to recover well with some not even feeling the infection. At the very least, the prognosis for Covid patients appears to be as good or as bad as most other pathogens that we have encountered in recent times. In fact, going by asymptomatic positives that are bubbling up just by the sheer chance of those people getting tested, there are mounting questions about whether Covid's fatality rate is being vastly overestimated.

So really, the only thing that this virus seems to have going for it is it's transmissibility. Nothing else.

During a difficult time like this, media houses have taken the predictable line of reporting only infections and deaths. But, administrations could have, and should have, borne the torch of courage. They should have urged people to take reasonable precautions to protect themselves and to protect the weak and the vulnerable, while going about their lives in a cautious manner. Those who are fearful should be allowed to stay home to a degree and employers should be encouraged (not mandated) to help manage this crisis with creative WFH schemes. In the meantime, we should have attacked the healthcare problem on a war footing, which we are admittedly doing now (at least I hope we are).

I remember how after 9/11, all administrations went on overdrive to convince people to live their lives while remaining unafraid, and to choose flying as a means of travel.

But now, instead of taking a bold stand and allaying people's fears, administrations world-wide are stoking the fear that death is knocking on each of our doors at this time. This is really hard for me to understand. Because no such thing is happening, at least not on the scale that justifies the deep economic pain that is being inflicted on people.

We have taken one crisis and then willfully turned it into a twin headed disaster. Instead of trying to reduce the risk and then accept the remaining risk, we are trying to completely eliminate the risk, which is impossible. And in the process, we are unleashing a tsunami of pain on people in another form. A tsunami that will long outlive the virus, especially with the culture of fear that has effectively been seeded into people's minds.

My wife is insisting that I take a full bath after I enter the house even if I were to take 10 steps into the empty lobby of our building to pick up the milk. I am in the presence of no one when I go to the lobby at 8 am in the morning. I touch nothing except the milk packets. On the way to the lobby and back, I open doors with my elbows and feet. When I get home, I wash my hands thoroughly. And yet, the fear is so high in my wife's mind that every trip to fetch milk is turning into a domestic firestorm at home.

If we are going to be perpetually afraid, how are we going to send our kids to school? How are we to have friends or guests over? How are we to allow professional service providers to help us with our lives? How are we to go out for a meal? How are we to travel by buses or planes or trains? How are we to live our lives?

Literally, we have initiated a response so massive in its mindset change that we are pulling the rug from under our own feet.

If we have to think of this in different terms, here is the most recent example of young men in the peak of their lives who literally gave up their lives to keep us safe. The risks for these young men are so high that there is a 50% chance that each one of their team will not make it back to base at the end of a mission, let alone come home in one piece after being deployed in the front. I mean, we expect people to willingly die for us. And yet, as a society we are afraid of a virus that has a less then 5% chance of killing us, provided that we get infected in the first place which in and of itself does not carry a 100% probability.

I tell you we don't even deserve the army or the navy or the air force or the thousand other professions where people routinely accept far greater risks for their countries and societies.

[balenoed_]

Well, some fun while you discuss:

[spoth001]

Originally Posted by adithya.kp

I think the assumption is that RBI will protect depositors in all public and private banks. But till now we have had only 2 cases in last 2 decades. Global trust bank and Yes bank. What if more banks get into trouble?. Can they handle?

RBI can only protect an account holder upto 5 Lakh INR. Refer to this article, moral of the story is to not keep all eggs in one basket: https://m.rbi.org.in/Scripts/FAQView.aspx?Id=64